Consider this: Somewhere in the world, right now, it is likely that someone is breaching the culture of the company that he or she represents. The transgression may be minor and it may pass quietly, or it may be so grievous that it bursts to the top of the organisation and attracts viral news coverage and widespread condemnation.

The response to such a possible corporate crisis reveals much about the culture of the organisation. Blame is often assigned to a “few bad apples,” a “rogue employee,” or a “random event.” It may appear in the early days of an unfolding crisis, that culture is the hardest word to say. Instead, the focus often turns to looking for someone at fault, punishing them, and considering the problem solved. The emphasis is on who, when the greater need is to look deeper and to ask how and why. Conversely, the media may put their focus higher and deeper—toward executive teams and boards, questioning their knowledge, or ignorance, of the breach and the system failure that enabled it.

There was a key finding in a recent global culture survey conducted by Korn Ferry. The majority of the 500 business leaders surveyed (72%) said that culture was extremely important to organisational performance, yet just 32% said their organisational culture aligns to a great extent with their business strategy. This means that two-thirds of executives believe in culture as a driver of performance, yet just a third believe it should closely align to strategy. The gap between these contradictory findings should concern business leaders, board directors, and executive teams. It is where risk and ambiguity thrive and where small cracks in culture widen, until something, somewhere, falls through.

In our report, Tone from the Top, we interviewed business leaders who serve on boards or are CEOs to gain their insights on the strengths and weaknesses in organisational culture. The conversations explored the relationship between strategy and culture and how fault lines can form in organisations that allow toxic subcultures to flourish. The business leaders helped to identify the warning signs—the smoke under the door—that should cause concern for executives and directors. They outlined ideas and practices on how organisations can achieve cultural alignment from the top down. Their views are illuminating, and their approach to cultural transformation will be of interest to anyone with a stake in the power and role of culture and the impact it has on performance.

How to identify culture derailers

People often say after a crisis that they could see the warning signs. The red flags were there, hiding in plain sight, accessible to those closest to them if they had known what to look for. It can be challenging for non-executive directors (NEDs) to identify a potential breach of culture because their touch points with the organisation tend to be structured and contained to their colleagues on the board, the CEO, and the executive team. However, NEDs share responsibility and accountability for their organisation’s culture, and, therefore, must be in tune to potential cultural breaches.

It may be intuitive and nuanced work, but it requires an unequivocal exploration—by the time the smoke comes under the door,” the damage has been done. Korn Ferry suggests NEDs explore a combination of these 10 markers to get closer to the organisation’s culture and avert harm.

10 red flags



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